image from ingenesist.com
The recent wedding in Bhutan of King Jigme Khesar Namgyel Wangchuck to Jetsun Pema on October 15, 2011 has brought the concept of Gross National Happiness vs. Gross Domestic Product (GDP) into the limelight once again.
According to the article, "Emulate Bhutan's Way to Gross National Happiness (GNH)" by Soo Ewe Jin (Malaysia Star online), the concept was first developed by the current king's father in 1972. Instead of measuring success and wealth solely on the economic criteria of the GDP, this king also wanted to measure success on the well being of Bhutan's citizens. Over the years, the concept has gained popularity and the concept has spread to economic theory and international rankings (see Gross National Happiness rankings)
GDP is measured in one of three ways, all of which address economic production: the expenditure method, the production method and the income method. The formula for the expenditure method is:
private consumption + gross investment + government spending + (exports - imports) = Gross Domestic Product
A straightforward but comprehensive explanation of all three methods and their components can be found on Wikipedia.
Gross National Happiness can seem more difficult to measure; the issues are addressed in a policy paper by Med Jones of the International Institute of Management. More simplistically, GNH is measured on four parameters, or "pillars":
- economic self-reliance
- respect for the environment
- the preservation and promotion of culture
- good governance in the form of a democracy
These national factors are interrelated and build from the bottom up, as delineated in this chart:
image from document linked below by Pamela Shreiner, page 7
These concepts have been adapted and incorporated into academic business and economic planning. In a paper entitled "Exploring Gross National Happiness Using Balanced Scorecard and Appreciative Inquiry", submitted to the Second International Conference on GNH, Pamela Schreiner provided a restatement of this chart on page 3, as it would apply to an individual business. You can download the graphic as part of the paper (.pdf, linked above). The content of the graphic--again, to be read from the bottom up--includes:
Financial: Be Profitable
Customers: Increase Customers; Delighted Customers
Internal Business Processes: Decrease Production Time; Increase Production Quality
Learning and Growth: On Time Data for Employees; Happy Employees
Schreiner also points out that the currently popular decision making models are more holistic than the economics-focused GDP, and are more aligned with the concepts of Gross National Happiness. In the current environment of economic uncertainty, the sustainable models have compelling appeal. This Venn diagram shows everything in balance.
graphic from 14wbpolicyglossary.wufoo.com
1. Access each of the links above until you can answer this question: What countries rank highest in GNH 2006, according to the article at the MSN Money site? What do these high ranking countries have in common? How are they the same and different from the United States?
2. Where is Bhutan? What has been its political structure? What is the philosophy upon which the pillars of progress are built, according to Soo Ewe Jin's article?
3. If you want to hear a lecture on this topic, access this video LINK from the GNHUSA conference, June 2010. The introduction to the speaker is pretty dry, but hang in there. The speaker, Eric Zencey, directly addresses GDP compared to measures of sustainable well-being.
After you watch, answer this question: What are some of the problems with GDP as a measure of economic activity, according to Zencey?